These are two independent situations: 1. Karen Cosmetics acquired (10 %) of the 200,000 shares of common
Question:
These are two independent situations:
1. Karen Cosmetics acquired \(10 \%\) of the 200,000 shares of common stock of Bell Fashion at a total cost of \(\$ 12\) per share on March 18, 1998. On June 30 Bell declared and paid a \(\$ 75,000\) dividend. On December 31 Bell reported net income of \(\$ 122,000\) for the year. At December 31 the market price of Bell Fashion was \(\$ 15\) per share. The stock is classified as available-for-sale.
2. Barb, Inc., obtained significant influence over Diner Corporation by buying \(30 \%\) of Diner's 30,000 outstanding shares of common stock at a total cost of \(\$ 9\) per share on January 1, 1998. On June 15 Diner declared and paid a cash dividend of \(\$ 35,000\). On December 31 Diner reported a net income of \(\$ 80,000\) for the year.
\section*{Instructions}
Prepare all the necessary journal entries for 1998 for
(a) Karen Cosmetics and
(b) Barb, Inc.
Step by Step Answer:
Financial Accounting Tools For Business Decision Making
ISBN: 9780471169192
1st Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso